NAV on 2019/11/14
|NAV on 2019/11/13
|52 week high on 2019/02/06
|52 week low on 2019/09/03
|Total Expense Ratio on 2019/09/30
|Total Expense Ratio (performance fee) on 2019/09/30
STANLIB Collective Investments (RF) Limited
South African--Real Estate--General
FTSE/JSE All Property Index (ALPI)
Keillen began his property fund management career at Standard Bank Properties in 2004 managing its leveraged listed property product. He became a listed property analyst at Stanlib in 2005 and now also co-manages the Stanlib Aggressive Income Fund.
Nesi started his investments career with RMB in 2002 where he was a member of the consumer industrial team and also assumed non-consumer research responsibilities. Nesi was previous head of Financials at RMB Asset Managers, responsible for banks and life assurance. He also managed the award winning RMB Financials Fund. In 2010, He was appointed as a fund manager and Head of property for Momentum. He managed the flagship Momentum Property Fund for over a decade and was responsible for asset allocation, research, strategy, and fund management within the property investments business. Nesi is a regular commentator on property, equities and the broader financial market. Nesi Joined STANLIB in June 2019 to co manage local and global listed property.
STANLIB Property Income Fund - Sep 19
STANLIB Property Income Fund outperformed its benchmark by 1.44% in the third quarter of 2019, delivering a -2.74% gross total return compared with the benchmark’s gross return of -4.18%. This quarter’s outperformance is attributable to the fund’s continued underweight position in Intu, as well as underweight positions in Redefine and Fortress B. Overweight positions in Sirius, Investec Australia and Safari also contributed to outperformance. Overweight positions in Dipula-B, Hammerson, MAS and underweight positions in Capital & Counties, SA Corporate and RDI detracted from performance. The fund has delivered a positive return of 1.66% in the year to date, outperforming the benchmark by 3.20%. Outperformance is largely the result of an increasingly defensive approach in taking underweight positions and avoiding companies with weak property fundamentals, while concentrating on stronger asset quality companies with stronger balance sheets and better growth prospects.
Over the past quarter, SA listed property (JSE All Property Index) delivered a total return of -4.18%, underperforming cash (STeFI Composite Index at 1.8%), underperforming SA bonds (ALBI or JSE All Bond Index at 0.78%) and outperforming SA equities (FTSE/JSE All Share index at -4.49%). The rand weakened 7% against the US dollar over the quarter, with pure offshore stocks the best performers in the All Property Index (Sirius +19%, Capital & Counties +14%, Hammerson +13% and Investec Australia +10%). Brexit uncertainty and market balance sheet concerns continued to weigh on Intu, a stock we do not hold, which fell -39% in the quarter. There was a nervous atmosphere at the beginning of the third quarter property reporting season, given a weak backdrop in the first half of 2019.
In July, UK results were released by Hammerson, Intu and CapCo. As anticipated, Hammerson’s results were reasonable compared with Intu’s, which appears to have balance sheet concerns. CapCo continues to try to unlock shareholder value through a demerger of its operations. On the SA side, Gemgrow announced a merger with Arrowhead, which has since been completed. Vukile agreed to purchase a single asset from Rebosis, having initially considered acquiring three assets. Safari received a cash offer for all its shares at R5.90/share from Community Property.
In August, it became increasingly apparent that weaker retail landlords were accepting materially lower rentals from tenants. Not all companies showed this dynamic, with Resilient showing the resilience of its well-regarded centres and asset quality in its results. Emira’s results showed a continued increase in its offshore exposure, pivoting its weighting from Australia to the US as the South African operations delivered negligible growth. Nepi-Rockcastle delivered a good set of results, showing the benefits of strong GDP growth in Poland, Romania and Central and Eastern European geographies. The Fourways Mall redevelopment, an asset of Accelerate Property Fund, officially opened in a tough retail environment. Delta and Rebosis began talks about a potential merger.
In September, Growthpoint reported a reasonable set of results, with 4.6% growth in distributable income per share driven in large part by its offshore operations. Fortress Fund reported results showing that Fortress-B could see downside risk if the operating environment continues to weaken, while the Fortress-A units continued to provide defensive income growth. In results from Accelerate Property Fund it stated it would consider retaining distributable income to reinvest in the company.
The All Property Index (ALPI) offers a forward dividend yield of about 9%, which is marginally above SA‘s 10-year bond yield. We anticipate dividend growth rate of 0% to 1% over the next 12 months. In the short term, dividend growth will remain under pressure from weakening property fundamentals and anaemic SA GDP growth. We encourage investors to take a long-term view in this (cyclical) sector, as we expect normalised real distribution growth will potentially return to the sector from 2021. In the current environment, we would consider the yield dynamic of the sector as the key driver of short-term total investor returns. The commentary gives the views of the portfolio manager at the time of writing. Any forecasts or commentary included in this document are not guaranteed to occur.
The STANLIB Property Income Fund aims for the growth of capital and to provide an income source. Investments may consist of property shares, property loan stock, debentures, debenture stock and bonds, unsecured notes, property unit trusts and other listed securities considered consistent with the portfolio's objective. Liquidity may be increased to 50% if deemed necessary by the manager. Exposure to fixed-interest securities is limited to 30%. The portfolio may also invest in the participatory interests of collective investment schemes. This portfolio may not have any direct and/or indirect foreign exposure.